Posts Tagged by Economy

Editorial The Fate of Europe by Fred E. Foldvary, Senior Editor Some critics of America’s waging war in Kosovo say that that region has little historic or strategic interest for the United States. These critics may well be right in […]

Editorial NATO’s Jubilee by Fred E. Foldvary, Senior Editor The chiefs of NATO’s 19 member countries celebrated the 50th anniversary of the North Atlantic Treaty Organization in Washington DC on Friday, April 23. NATO, founded on April 4, 1949, evolved […]

Editorial Oil and War and Iraq by Fred E. Foldvary, Senior Editor Millions demonstrated against a war in Iraq on February 15, 2003. Thousands more demonstrated on, Sunday, February 16, in San Francisco. A common cry of the protesters is […]

Editorial Dock Shutdown! Who Should Pay? by Fred E. Foldvary, Senior Editor The work stoppage at 29 U.S. West Coast ports has cost the American economy over $2 billion per day, according to the president of the Federal Reserve Bank […]

Editorial Globalization and Globalization by Fred E. Foldvary, Senior Editor Globalization has now become as much a propaganda term as capitalism. Critics of markets complain about capitalism instead of private enterprise or markets because they can exploit the meaninglessness of […]

Editorial The Single-Person Motor Vehicle: Who really gains? by Fred E. Foldvary, Senior Editor “Segue” means to continue immediately to another place without a transition break. Now we have the new invention, the Segway Human Transporter, a one-person stand-up motorized […]

Editorial The New Economic Realities by Fred E. Foldvary, Senior Editor Since the early 1800s there has been a real estate cycle in the USA and Europe. In the United States, about every 18 years, real estate prices and construction […]

Editorial Truthful Propaganda and Food Against Terror by Fred E. Foldvary, Senior Editor Wars are fought not just with the force of arms, but also with propaganda. Propaganda is the systematic distribution and promotion of ideas to further one’s cause. […]

Editorial Frédéric Bastiat by Fred E. Foldvary, Senior Editor Frédéric Bastiat (1801-1850) was a French free-market economist who advocated free trade. With wit and irony, he pulverized economic fallacies about jobs and protectionism. In celebration of the 200th anniversary of […]

Editorial Is the US Economy in Recession? by Fred E. Foldvary, Senior Editor The headlines say the economy of the U.S.A. has avoided a recession, as the gross domestic product grew by .7 % in the second quarter, April through […]

Fred Foldvary’s Editorial Classroom Experiment: Geoism is Better! by Fred E. Foldvary, Senior Editor I ran a classroom experiment simulating an economy. I had two classes of about 50 students each. I divided the class into three districts: low tech, […]

Fred Foldvary’s Editorial A Global Government to Steal Your Money: OECD tries to eliminate tax competition by Fred E. Foldvary, Senior Editor There are in the world today about 200 countries and semi-independent territories, each with its own tax system. […]

Editorial Will There Be a Recession? by Fred E. Foldvary, Senior Editor The beginning of a new year is the traditional time to look ahead, make plans for the coming months, and try to guess what may happen. Many people […]

Fred Foldvary’s Editorial Technology and Free Enterprise by Fred E. Foldvary, Senior Editor Does technological progress require more or less government intervention in the economy? The evidence is that advancing technology makes the intellectual and theoretical case for free enterprise […]

Fred Foldvary’s Editorial Is There a New Economy? by Fred E. Foldvary, Senior Editor No, there isn’t any “new economy.” There are new products and new technology. But the basics of economies have not changed ever since human beings have […]

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Arts & Letters

Geonomics is …

a neologism for sharing “rent” or “social surplus” – the money we spend on the nature we use. When we buy land, such as the land beneath a home, we typically pay the wrong person – the homeowner. Instead, since land cost us nothing to make and is the common heri-tage of us all, rather than pay the owner, we should pay ourselves, our neighbors, our community. That is, we should all pay land dues to the public treasury, then our government would pay us land dividends from this collected revenue. It’s similar to the Alaska oil dividend, almost $2,000 last year. Indeed, the annual rental value of land, oil, all other natural resources, including the broadcast spectrum and other government-granted permits such as corporate charters, totals several trillion dollars each year. It’s so much that some could be spent on basic social services, the rest parceled out as a divi-dend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jeffer-son suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.

a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.

a way to have everybody pulling on the same end of the rope. Last summer’s expansive forest fires shed light on growing class resentment in the West. Old loggers and ranchers rankled at the new urgency to stamp out the blazes that threatened the recent Aspenesque settlers. The newcomers expected working class firemen to make protecting their expensive homes top priority. (Chr Sci Mntr, Spt 7) The tinder for this envy? Rich people moving in bid up the price of land, making it hard to afford by people on the margin. The fault really lies with our system of privatizing land value. If this rising value were collected by land dues and shared by rent dividends – the essence of geonomic policy – who’d complain? The more people move in, the higher the land value, and the fatter the dividend paid to residents. Then people on the margin might go out of their way to invite rich outsiders in.

a scientific look at how we divvy up the work and the wealth, how some of us end up with too much or too little effort or reward. That’s partly due to Ricardo’s Law of Rent, showing how wasteful use of Earth cuts wages. And it’s partly due to how a society’s elite runs government around like water boys, dishing out subsidies and tax breaks. While geonomists look political reality right in the eye, without blinking, conventional economists flinch. When Paul Volcker, ex-chief of the Federal Reserve, moved on to a cushy professorship at Princeton cum book contract, the crush of deadlines bore down. So Volcker asked a junior associate to help with the book. The guy refused, explaining that giving serious consideration to policy would ruin his academic career. The ex-Fed chief couldn’t believe it and asked the department chair if truly that were the case. That head honcho pondered the question then replied no, not if he only does it once. And economics was AKA political economy!

more transformation than reform; it’s a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this “autism” – or detachment from reality – and dub their offering “post-autistic economics”. Not a bad name, but again, academics define themselves by what they’re not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.

an economic policy based on the earth’s natural patterns. Eco-systems self-regulate by using feedback loops to keep balance. Can economies do likewise? Why don’t they now produce efficiently and distribute fairly? The answers lie in the money we spend on the earth we use. To attain people/planet harmony, that financial flow from sites and resources must visit each of us. Our agent, government, must collect this natural rent via fees and disburse the collected revenue via dividends. And, it must forgo taxes on homes and earnings, and quit subsidies of either the needy or the greedy. As our steward, government must also collect Ecology Security Deposits, require Restoration Insurance, and auction off the occasional Emissions Permit. And that’s about it – were nature our model.

a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.

what you do when you see economies as part of the ecosystem, following feedback loops and storing up energy. Surplus energy – fat or profit – enables us to produce and reproduce. To recycle society’s surplus, the commonwealth, geonomics would replace taxes with land dues (charged to users of sites and resources, including the EM spectrum, and extra to polluters), and replace subsidies with rent dividends to citizens (a la Alaska’s oil dividend). Without taxes and subsidies to distort them, prices become precise, reflect accurately our costs and values; then, motivated by no more than the bottom line, both producers and consumers make sustainable choices. While no place uses geonomics in its entirety, some places use parts of it, most notably a shift of the property tax off buildings, onto locations. Shifting the property tax drives efficient use of land, in-fills cities, improves the housing stock, makes homes affordable, engenders jobs and investment opportunities, lowers crime, raises civic participation, etc – overall it makes cities more livable. Geonomics – a way to share the bounty of nature and society – is something we can work for locally, globally, and in between.

the study of the money we spend on the nature we use. When we pay that money to private owners, we reward both speculation and over-extraction. Robert Kiyosaki’s bestseller, Rich Dad’s Prophecy, says, “One of the reasons McDonald’s is such a rich company is not because it sells a lot of burgers but because it owns the land at some of the best intersections in the world. The main reason Kim and I invest in such properties is to own the land at the corner of the intersection. (p 200) My real estate advisor states that the rich either made their money in real estate or hold their money in real estate.” (p 141, via Greg Young) When government recovers the rents for natural advantages for everyone, it can save citizens millions. Ben Sevack, Montreal steel manufacturer, tells us (August 12) that Alberta, by leasing oil & gas fields, recovers enough revenue to be the only province in Canada to get by without a sales tax and to levy a flat provincial income tax. While running for re-election, provincial Premier Ralph Klein proposes to abolish their income tax and promises to eliminate medical insurance premiums and use resource revenue to pay for all medical expense for seniors. After all this planned tax-cutting and greater expense, they still expect a large budget surplus. Even places without oil and gas have high site values in their downtowns, and high values in their utility franchises. Recover the values of locations and privileges, displace the harmful taxes on sales, salaries, and structures, then use the revenue to fund basic government and pay residents a dividend, and you have geonomics in action.

about the money we spend on the nature we use. It flows torrentially yet invisibly, often submerged in the price of housing, food, fuel, and everything else. Flowing from the many to the few, natural rent distorts prices and rewards unjust and unsustainable choices. Redirected via dues and dividends to flow from each to all, “rent” payments would level the playing field and empower neighbors to shrink their workweek and expand their horizons. Modeled on nature’s feedback loops, earlier proposals to redirect rent found favor with Paine, Tolstoy, and Einstein. Wherever tried, to the degree tried, redirecting rent worked. One of today’s versions, the green tax shift, spreads out of Europe. Another, the Property Tax Shift, activists can win at the local level, building a world that works right for everyone.

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Thoughts for the Day

Courage is the power to let go of the familiar.

Raymond Lindquist

To prevent government from becoming corrupt and tyrannous, its organization and methods should be as simple as possible, its functions be restricted to those necessary to the common welfare, and in all its parts it should be kept as close to the people and as directly within their control as may be.

Henry George

Knowing is not enough; we must apply. Willing is not enough; we must do.

Johann Wolfgang von Goethe

When I was a boy I was told that anybody could become President; I’m beginning to believe it.

Clarence Darrow

The man who is not a socialist at twenty has no heart, but if he is still a socialist at forty he has no head.

Aristide Briand

Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much higher consideration.

Abraham Lincoln

It gets late early out there.

Yogi Berra

Common sense is the collection of prejudices acquired by age eighteen.

Albert Einstein

In theory there is no difference between theory and practice. In practice there is.

Yogi Berra

Deeply earnest and thoughtful people stand on shaky footing with the public.